In 2004 Greece not only saw significant political developments at home but was also in the international limelight as the host of the 2004 Olympic Games. On March 7 parliamentary elections brought an end to 11 years of rule by the Panhellenic Socialist Movement (PASOK) and the return to power of the centre-right New Democracy (ND). With 45.4% of the vote, ND won 165 of the 300 mandates in the parliament, compared with 40.6% and 117 seats for PASOK. The Communist Party of Greece (KKE) won 5.9% and 12 seats, and the Alliance of the Left of Movements and Ecology (SYN) won 3.3% and 6 seats. Other parties, including the rightist-populist Popular Orthodox Rally (LAOS), failed to pass the 3% threshold.

Pres. Konstantinos (Kostis) Stephanopoulos asked ND leader Konstantinos (Kostas) Karamanlis (seeBiographies) to form a new government. The new government was sworn in on March 10. In presenting his government’s program, Karamanlis stated that the priorities were education and culture, economic policy, agricultural policy, and a more transparent and effective state administration. Although the opposition, the media, and part of the public accused his government of inaction and lethargy, Karamanlis ruled out a reshuffle. He did, however, have to replace Agriculture Minister Savvas Tsitouridis, who resigned in September after having been charged with nepotism. ND’s dominant position was underlined by its success in the elections to the European Parliament on June 13, when it won 43% of the vote, compared with PASOK’s 34%. KKE won 9.5%, while SYN and LAOS each received just over 4%.

The year also brought changes within several political parties. Even before the parliamentary elections, then prime minister Konstantinos Simitis on January 7 resigned as PASOK president and announced that he would not stand for reelection as prime minister. He was succeeded by Foreign Minister Georgios Papandreou, who was the only candidate in direct elections by the party’s members and “friends” on February 8. It soon became apparent that some leading PASOK members were at odds with Papandreou’s political vision and strategy, and the party at times gave an outward image of internal disunity.

Following the European Parliament elections, SYN leader Nikos Konstantopoulos announced that having served three terms, he would not seek reelection at the party’s congress in December. He was replaced as party leader by Alexandros Alavanos. Karamanlis, for his part, dominated the ND party congress in July, and his cronies were elected to leading party positions.

In February 2004 the trial of five suspected members of Revolutionary People’s Struggle (ELA), an extreme-left terrorist organization, opened, with one defendant admitting having been a member of ELA and the rest denying all charges. Four were found guilty of relatively minor charges but were still sentenced to 25 years each, and one was acquitted.

The new government continued to work for good relations with Greece’s neighbours, including Turkey. Athens supported the official line of Cypriot Pres. Tassos Papadopoulos against the United Nations plan for reunification of Cyprus before its accession to the European Union; in effect, Greek Cyprus alone joined the EU in May. The U.S. decision to recognize Macedonia by its constitutional name led to protests by Greek politicians and the public alike.

The Greek economy grew by an estimated 3.9%, with an inflation rate of 2.9% and 11.2% unemployment. A 5.3% budget deficit and a public debt level at 112% of GDP, however, were significantly higher than the previous government’s targets. In fact, in September it was announced that the Simitis government had for years reported budget-deficit figures that were considerably below the real ones and that Greece had violated the EU Stability and Growth Pact between 2000 and 2003. The European Commission announced that it was considering legal steps against Greece.

Throughout 2004, and especially before the opening on August 13 of the 2004 Summer Olympic Games (seeSports and Games:Special Report), major infrastructure projects were completed. These included the world’s longest (in total length) cable-stayed suspension bridge, which linked the Peloponnesus and western mainland Greece; suburban train, subway, and tram lines in Athens; road projects; and, of course, sport venues. The Games lasted until August 29 and were followed by the Paralympics in September. The events were generally hailed as a success, although attendance was at times low. The Greek public was shocked by the withdrawal of two of the country’s top athletes, who failed to take a drug test shortly before the opening. Tight security (provided in part by NATO troops) proved quite effective but added an estimated €1 billion (about $1.2 billion) to the final tab for the Games. Taking everybody by surprise, the Greek national association-football (soccer) team on July 4 won the European championship. Xenophon Zolotas, a former prime minister and governor of the Bank of Greece, died on June 11 at age 100.

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